Special Consumption Tax Law number 27/2008/QH12

LAW

Special Consumption Tax

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Pursuant to the Constitution of the Socialist Republic of Vietnam in 1992 as amended and supplemented by Resolution number 51/2001/QH10;

The National Assembly enacts the Special Consumption Tax Law,

PART I

GENERAL PROVISIONS

Article 1. Scope of Regulation

This Law stipulates the taxable objects, non-taxable objects, taxpayers, tax base, refund of tax, deduction of tax, and reduction of special consumption tax.

Article 2. Taxable Objects

1. Goods:

a) Cigarettes, cigars, and other products made from tobacco leaves for smoking, inhaling, chewing, sniffing, or sucking;

b) Alcohol;

c) Beer;

d) Passenger cars under 24 seats, including passenger-cargo vehicles with two or more rows of seats and a fixed partition between the passenger compartment and cargo area;

đ) Two-wheeled motorcycles and three-wheeled motorcycles with engine displacement over 125 cm³;

e) Aircrafts, yachts;

g) Various types of gasoline, naphtha, reformate components, and other products used to blend gasoline;

h) Air conditioners with cooling capacity up to 90,000 BTU;

i) Playing cards;

k) Paper money, paper goods.

2. Services:

a) Operating nightclubs;

b) Operating massage services, karaoke;

c) Operating casinos; electronic games with prizes including jackpot machines, slot machines, and similar types of machines;

d) Operating betting services;

đ) Operating golf services including selling membership cards and golf playing tickets;

e) Operating lottery services.

1. For imported goods exempt from special consumption tax as specified in Point a, Clause 2, Article 3 of the Special Consumption Tax Law, including:

Goods specified in Clause 1 of Article 2 of this Law are not subject to special consumption tax in the following cases:

1. Goods produced or processed directly for export or sold, entrusted to other businesses for export;

2. Imported goods including:

a) Humanitarian aid, non-reimbursable aid; gifts for state agencies, political organizations, socio-political organizations, occupational socio-political organizations, social organizations, occupational social organizations, people's armed forces units, gifts for individuals in Vietnam within the limits prescribed by the Government;

b) Goods transported through transit or via border gates, borders of Vietnam, goods transferred according to regulations of the Government;

c) Temporarily imported goods for re-export, temporarily exported goods for re-import without payment of import duties, export duties within the time limit prescribed by laws on export duties, import duties;

d) Personal effects of foreign organizations and individuals according to diplomatic exemption standards; goods carried by persons within the duty-free baggage allowance; goods imported for sale at duty-free prices according to the provisions of the law;

3. Aircrafts, yachts used for commercial transportation of goods, passengers, tourists;

4. Ambulances; prisoner transport vehicles; funeral vehicles; passenger-cargo vehicles designed to carry both seated and standing passengers from 24 people upwards; vehicles running in amusement parks, entertainment areas, sports venues that are not registered for circulation and do not participate in traffic;

5. Goods imported from abroad into duty-free zones, goods from domestic areas sold into duty-free zones and only used within duty-free zones, goods traded between duty-free zones, except passenger cars under 24 seats.

Article 4. Taxpayers

The taxpayer of special consumption tax is an organization or individual producing, importing goods and operating services subject to special consumption tax.

In the case where an organization or individual engaged in export business purchases goods subject to special consumption tax from production units for export but does not export them and instead consumes them domestically, the organization or individual engaged in export business shall be the taxpayer of special consumption tax.

PART II

BASIS FOR TAXATION

Article 5. Tax Base

The tax base for special consumption tax is the taxable value of taxable goods and services and the tax rate. The amount of special consumption tax payable is calculated by multiplying the taxable value of special consumption tax by the special consumption tax rate.

Article 6. Taxable Value

The taxable value for special consumption tax on goods and services is the selling price or service supply price without special consumption tax and value-added tax, as specified below:

1. For domestically produced goods, it is the selling price set by the production entity.

2. For imported goods, it is the import duty value plus import duties. In cases where imported goods are exempted or reduced from import duties, the taxable value does not include the amount of exempted or reduced import duties.

3. For processed goods, it is the taxable value of the goods sold by the processing entity or the selling price of similar products at the same time of sale.

4. For goods sold under installment or deferred payment terms, it is the selling price of the goods if paid in full at once, excluding the installment interest or deferred payment interest.

5. For services, it is the service supply price of the business entity. The service supply price for certain cases is specified as follows:

a) For golf course operations, it includes the membership card price and golf play ticket price, including green fees and deposit (if applicable).

b) For casino operations, electronic games with prizes, and betting activities, it is the revenue from these activities minus the prize money paid to customers.

c) For nightclub, massage, and karaoke operations, it is the revenue from the respective business activities within nightclubs, massage establishments, and karaoke venues.

6. For goods and services used for exchange, internal consumption, gifts, or donations, it is the taxable value of similar or equivalent goods or services at the time such activities occur.

The taxable value for special consumption tax on goods and services as stipulated in this Article includes additional income received (if any) that the business entity enjoys.

The taxable value is calculated in Vietnamese Dong. If the taxpayer's revenue is in foreign currency, it must be converted to Vietnamese Dong based on the average inter-bank foreign exchange rate published by the State Bank of Vietnam at the time of revenue generation to determine the taxable value.

The Government shall specify this Article in detail.

The special consumption tax rate for goods and services is prescribed according to the following Special Consumption Tax Schedule:

SPECIAL CONSUMPTION TAX TABLE

 CHAPTER III

REFUND OF TAX, DEDUCTION OF TAX, AND REDUCTION OF TAX

Article 8. Refund and Deduction of Special Consumption Tax

1. The taxpayer of special consumption tax is entitled to a refund of taxes paid in the following cases:

a) Temporarily imported goods for re-export.

b) Raw materials imported for producing or processing export goods.

c) Final settlement of tax when merging, consolidating, splitting, dissolving, bankruptcy, changing ownership, converting enterprises, or ceasing operations with excess tax paid.

d) A decision to refund tax made by the competent authority in accordance with the law and in cases of special consumption tax refunds pursuant to international treaties to which the Socialist Republic of Vietnam is a party.

The refund of special consumption tax as provided in points a and b of this paragraph shall only apply to goods actually exported.

2. A taxpayer who produces goods subject to special consumption tax using raw materials that have already been taxed may deduct the tax paid on the raw materials when determining the special consumption tax payable at the production stage, provided they have valid documentation.

The Government shall specify this Article in detail.

Article 9. Tax Reduction

Taxpayers producing goods subject to special consumption tax who encounter difficulties due to natural disasters or unexpected accidents shall be eligible for tax reduction.

The level of tax reduction shall be determined based on actual losses caused by natural disasters or unexpected accidents but not exceeding 30% of the tax payable for the year in which the damage occurred and not exceeding the value of the damaged assets after compensation (if any).

Chapter IV

IMPLEMENTING PROVISIONS

Article 10. Effective Date

1. This Law takes effect from April 1, 2009; provisions concerning alcoholic beverages and beer take effect from January 1, 2010.

2. Abolish the provisions of the Special Consumption Tax Law No. 05/1998/QH10; the Law Amending and Supplementing Certain Provisions of the Special Consumption Tax Law No. 08/2003/QH11; Article 1 of the Law Amending and Supplementing Certain Provisions of the Special Consumption Tax Law and the Value Added Tax Law No. 57/2005/QH11, except for the provisions concerning alcoholic beverages and beer which continue to be effective until December 31, 2009.

Article 11. Implementation Guidance

The Government shall provide detailed regulations and guidance on implementing the provisions assigned in this Law; guide other necessary contents of this Law to meet state management requirements.

This Law was passed by the Fourth Session of the Twelfth National Assembly of the Socialist Republic of Vietnam on November 14, 2008./.